Elan Buying into Theravance Royalty Stream for $1B

By Cormac SheridanStaff Writer

DUBLIN, Ireland ‑ Elan Corp. plc is putting down a $1 billion bet that the respiratory franchise shared by Theravance, Inc., and GlaxoSmithKline plc will pay generous dividends over the next decade. Elan is acquiring 21 percent stake in Theravance's future royalty streams from four drugs , which are partnered with London-based GSK.

The first drug included in the deal, Breo (fluticasone furoate and vilanterol inhalation powder), which is administered using the Ellipta inhaler, has just gained FDA approval as a daily maintenance therapy for relieving airflow obstruction in patients with chronic obstructive pulmonary disease (COPD). (See BioWorld Today, May 13, 2013.).

The other drugs involved in the deal are not yet approved. Anoro Ellipta, which combines two investigational bronchodilators, vilanterol, a long-acting beta agonist (LABA), and umeclidinium bromide (Umec), a long-acting muscarinic antagonist (LAMA), was accepted by the FDA for review as a COPD therapy on Feb. 19. It has a Dec. 18 PDUFA date.

MABA, a bifunctional muscarinic antagonist and beta 2 agonist, is awaiting the start of a Phase III trial in COPD. A Phase III trial of vilanterol, as monotherapy, is currently recruiting patients with COPD.

The deal, which is expected to close in June, represents a major step in Dublin, Ireland-based Elan's ambitions to assemble what CEO Kelly Martin recently referred to as a "constellation of transactions", in the wake of its $3.25 billion disposal of its 50 percent stake in the multiple sclerosis drug Tysabri (natalizumab) to erstwhile partner Biogen Idec Inc. of Weston, Mass. (See BioWorld Today, April 25, 2013.)

Although it does point to a possible future for the company as a royalty management outfit ‑ akin to that of its would-be acquirer, the New York-based Paul Royalty Fund ‑ this is not the only path it intends to pursue. "This is not a pure royalty model," he told BioWorld Today. "I think you're going to see a mixed approach where they'll also invest in assets in development and help to bring them on."